Short title

This Act may be cited as the

Rural Housing Opportunity and Enhancement Act of 2005

Guarantees for rural housing loans

(a)

Income limitation

(1)

In general

Section 502(h) of the Housing Act of 1949 (42 U.S.C. 1472(h)) is amended— (A)by striking paragraph (3); and (B)in paragraph (11), by striking for low and moderate income families. (2)

Repeal

Section 751 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (42 U.S.C. 1472 note) is hereby repealed: (b)

Guarantee fee

(1)

In general

Section 502(h)(8) of the Housing Act of 1949 is amended by striking not more than 1 percent and inserting 0.9 percent. (2)

Repeals

The following provisions are hereby repealed: (A)Section 739 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (42 U.S.C. 1472 note). (B)Section 726 of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2005 (118 Stat. 2842). (c)

Repayment ability

Section 502(h) of the Housing Act of 1949 is amended by inserting after paragraph (2) the following new paragraph:

(3)

Eligibility of borrowers

Any regulations of the Secretary limiting eligibility of borrowers for loans guaranteed pursuant to this subsection based upon the ratio between the debt and income of the borrower shall provide for a higher income-to-debt ratio with respect to loans for newly constructed properties

Guarantees for refinancing loans

Section 502(h)(14) of the Housing Act of 1949 (42 U.S.C. 1472(h)(13)) is amended as follows: (1)

Guarantee fee

(A)In subparagraph (A), by striking (F) and inserting (I). (B)In subparagraph (E), by striking (8),. (C)By redesignating subparagraphs (E) and (F) as subparagraphs (H) and (I), respectively. (D)By inserting after subparagraph (D) the following new subparagraph:

(E)

Guarantee fee

With respect to a refinancing loan under this paragraph, the Secretary may collect from the lender at the time of issuance of the guarantee a fee equal to 0.5 percent of the principal obligation of the loan.

(2)

Refinancing other types of mortgages

In subparagraph (A)— (A)by inserting (i) before under this section; and (B)by inserting before the last comma the following: , or (ii) to acquire or construct a single-family residence that meets the requirements of paragraph (4). (3)

Loan amount

In subparagraph (D), by striking and such closing costs and all that follows through prescribe and inserting the following: and closing costs, which shall include amounts paid as an origination fee, but not in excess of 1 percent of the principal obligation of the loan, amounts paid as a discount fee, but not in excess of 200 basis points, any amounts required to be paid into escrow upon loan origination, and such other closing costs as the Secretary may prescribe. (4)

Elimination of income restriction

In subparagraph (H), as so redesignated by paragraph (1)(B) of this section, by striking (3),. (5)

Loan requirements

By inserting before subparagraph (H), as so redesignated by paragraph (1)(B) of this section, the following new subparagraphs:

(F)

Prohibited loan terms

The Secretary may not require, for a refinancing loan to be eligible for a guarantee under this paragraph— (i)that an appraisal credit report or underwriting be conducted in connection with the loan; or (ii)in the case of a loan described in clause (i) of subparagraph (A), that the residence in connection with which the loan is made be located in a rural area. (G)

Required loan terms

The Secretary shall require, for a refinancing loan to be eligible for a guarantee under this paragraph, that— (i)the borrower is not delinquent with respect to payment of the existing loan being refinanced; and (ii)the monthly payments required by the borrower under the refinancing loan be at least $50 less than the monthly payments so required under the existing loan being refinanced.

Recording of loans

Section 501 of the Housing Act of 1949 (42 U.S.C. 1471) is amended by adding at the end the following new subsection:

(k)

Recording requirements

The Secretary shall provide that each loan made, insured, or guaranteed under this title shall be recorded, in accordance with any applicable State and local laws requiring recordation of loans, as a loan made, insured, or guaranteed (as appropriate) by the Department of Agriculture, and not as a conventional loan.

Rural area definition

Clause (3) of the first sentence of section 520 of the Housing Act of 1949 (42 U.S.C. 1490) is amended by striking and (A) and all that follows through moderate-income families,.

Income limitation for direct loans

The first sentence of paragraph (4) of section 501(b) of the Housing Act of 1949 (42 U.S.C. 1471(b)(4)) is amended by inserting before the period at the end the following: , except that in determining such respective levels for purposes of direct loans made under section 502, section 3(b)(2) of such Act (42 U.S.C. 1437a(b)(2)) shall be applied by substituting 150 percent for 80 per centum each place such term appears and by substituting 93.75 percent for 50 per centum each place such term appears.